Aetna Casualty & Surety Co. v. Broadway Arms Corp.

We are recognizing in this case that there exists a cause of action by an insured against his insurance company for bad faith or outrageous conduct. Such a cause of action is for both compensatory and punitive damages, but the emphasis is on the punitive aspect — because if the conduct of the insurance company is outrageous, it ought to be punished. The majority opinion does not refer to the new tort as outrage, but as one arising out of bad faith.

It is generally agreed that this tort was first recognized in California and is undergoing a period of refinement. Other states are following that…